What Is EMCOR Group, Inc.'s (NYSE:EME) Share Price Doing?

EMCOR Group, Inc. (NYSE:EME), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a US$8.4b market cap stock, it seems odd EMCOR Group is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine EMCOR Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for EMCOR Group

Is EMCOR Group Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% below my intrinsic value, which means if you buy EMCOR Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth $203.75, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that EMCOR Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will EMCOR Group generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of EMCOR Group, it is expected to deliver a relatively unexciting earnings growth of 8.5%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for EMCOR Group, at least in the near term.

What This Means For You

Are you a shareholder? EME’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on EME, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing EMCOR Group at this point in time. Case in point: We've spotted 1 warning sign for EMCOR Group you should be aware of.

If you are no longer interested in EMCOR Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.